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The New York Times: Yes, Even the Rich Deserve a Tax Cut | Cypress Semiconductor

The New York Times: Yes, Even the Rich Deserve a Tax Cut

Last Updated: 
Sep 03, 2009

The New York Times: Yes, Even the Rich Deserve a Tax Cut

T.J. Rodgers

SAN JOSE, Calif. -- Allow me to introduce myself: I am among the richest of Americans, excess of the 1980's, some people might say. I earned about what a top athlete does over the last 17 years by starting a chip company in Silicon Valley now worth $5 billion.

My company has created more than 5,000 jobs since 1983 and pays its American workers an average of more than $86,000 (on which they will pay an estimated $102.8 million in taxes in 2000). The company itself will pay $66.4 million in taxes in 2000, and it has helped to make America a leader in semiconductors.

But in this presidential campaign, I have learned that I am part of the problem. Al Gore has attacked George W. Bush's tax plan, because he says that it favors the richest Americans. Mr. Bush's response is very simple and very right - if you pay taxes, you deserve a tax cut, no matter how much money you make. I am offended by Al Gore's continuous attacks on wealth producers, because he continues the class warfare of the Clinton administration. But I don't want sympathy. I do want to point out what I do with that wealth.

On the corporate side, Cypress invests all tax savings in research and development. We currently spend $200 million on research and development, and we neither want nor need government handouts in that area. Every extra million in tax dollars paid by my company strips it of the ability to hire 10 engineers to work on high-performance chips for the wireless revolution and the data superhighway. We are building the Internet, along with other Silicon Valley companies.

On the personal side, declining to grant me a tax break simply diverts my investments from the world's most advanced technology companies, which are largely unknown in Washington. Instead, this tax money flows to Washington, with the absurd claim that it will be better invested by politicians.

The specifics are clear. Three-quarters of the Gore tax cuts will have little effect on incentives to work another hour or save and invest another dollar, according to the Institute for Policy Innovation, a research group in Texas. The program ignores businesses and even many middle- class families to the detriment of the economy. In the long term, that program will trickle down, hurting low-income families more than the Gore tax cuts will ever help them.

The Bush tax cuts, on the other hand, would be a tide to lift all boats. According to the Institute for Policy Innovation, by 2010 the resulting drop in marginal tax rates under his plan would help raise the growth rate from about 2.7 percent to 2.97 percent, boosting employment by nearly 2 million jobs.

A tax cut for those in lower income brackets will create more consumer dollars (fine with me), but let's also create new investment for lasting, broad-based economic development. An across-the-board tax cut will at least put some of the billions in surplus federal taxes back into the Silicon Valley economic engine that helped to create the surplus to begin with.

In other words, if the federal government cuts my taxes, I won't drink an extra bottle of Lafite-Rothschild per day; I'll invest my tax break in 130 Silicon Valley companies rather than the 110 I currently invest in. I'll spend my company's share of the tax break on research and development.

That's the right thing to do for the rich, the poor and everyone in between.
T. J. Rodgers is president and chief executive of Cypress Semiconductor.

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